Wall Street Is Pulling Back, But This Analyst Believes In Pandora's Story

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Shares of Pandora Media Inc P lost around one-quarter of their value Friday in reaction after the streaming service reported third-quarter EPS and sales misses.

Not all of Wall Street wants to change the station. Count Canaccord Genuity's Michael Graham among them: He maintained a Buy on Pandora's stock with a price target lowered from $14 to $11 in a Thursday note. 

The streaming music company's Q3 could be viewed as a "transition," as most of the reported metrics were in line with expectations, but several advertising-related numbers were disappointing, Graham said. (See Graham's track record here.) 

The ad-supported listener base realized a worse-than-expected decline in users, and total advertising revenue fell short of the consensus estimate by 5 percent, according to Canaccord. 

At the same time Pandora offered a vision for its future, including multiple investments and initiatives that should "get these numbers moving in the right direction," Graham said. Pandora detailed two categories of investments: growing the listener base through non-music content like podcasts and improving the ad tech stack by making transactions more flexible to advertisers through programmatic and self-serve channels.

Pandora's transition will take time before signs of success are visible, but in the meantime investors should continue to recognize the "value" of its "large, engaged listener base," Graham said. 

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